There are many ways you can work with your videos to create special effects beyond the iMovie effects. We don't have Adobe After Effects, Final Cut Pro or Premiere so we will be trying some work arounds for editing.

This is a great explanation of how to use Photoshop the edit video instead of iMovie.

http://provideocoalition.com/pvcexclusive/story/basic_video_editing_with_photoshop_cs4_cs5_extended

http://tv.adobe.com/watch/short-and-suite/using-video-in-photoshop-cs4/

http://tv.adobe.com/watch/learn-photoshop-cs4/rotoscoping-using-after-effects-and-photoshop/


In iMovie you can layer video over video or still images over video. It's not super transparent, but you can then play with special effects and transitions to get what you're looking for. Here is a basic tutorial on Picture in Picture, which is how you layer images and clips in iMovie.



How to use Green Screen to clone yourself or others in iMovie.


Some ways to create layering effects in iMovie